The Cyclical Behavior of Industrial Labor Markets: A Comparison of the Pre-War and Post-War Eras

This paper studies the cyclical behavior of a number of industrial labor markets of the pre-war (1923-1939) and post-war (1954-1982) eras. In the spirit of Burns and Mitchell we do not test a specific structural model of the labor market but instead concentrate on describing the qualitative features of the (monthly, industry-level) data.The two principal questions we ask are: First, how is labor input (as measured by the number of workers, the hours of work, and the intensity of utilization) varied over the cycle ? Second, what is the cyclical behaviorof labor compensation (as measured by real wages, product wages, and real weekly earnings) ? We study these questions in both the frequency domain and the time domain. Many of our findings simply reinforce, or perhaps refine, existing perceptions of cyclical labor market behavior. However, we do find some interesting differences between the pre-war and the post-war periods in ther elative use of layoffs and short hours in downturns, and in the cyclical behavior of the real wage.

Bernanke, Ben S. and James L. Powell. "The Cyclical Behavior of Industrial Labor Markets: A Comparison of the Pre-War and Post-War Eras." The American Business Cycle: Continuity and Change, editedby Robert J. Gordon. Chicago: UCP, 1986, pp. 583-621 and 633-637.